These are the costs associated with production and sales. They, in turn, are divided into direct and indirect costs.

Direct expenses are...

According to Article 318 of the Tax Code, the distribution of sales costs into direct and indirect must be carried out by organizations that use the accrual method to calculate income tax. What relates to direct expenses in tax accounting is discussed in the same article.

First of all, direct costs are material costs regulated by Article 254 of the Tax Code. Among them are:

expenses for the acquisition of raw materials, components and other similar things for the production of goods, performance of work, provision of services, as well as for the purchase various materials to pack or otherwise prepare goods for sale;
this also includes expenses for the purchase of inventory and tools that are required for the production process and do not belong to fixed assets;
payment utilities for the functioning of production premises;
purchase of workwear;
payment for work and services of a production nature, in short, all expenses that may arise in the course of the company’s work in its main activities.

The next category of direct production costs is labor costs. They include the direct salary of the organization’s employees, various bonuses and incentive payments, as well as insurance premiums which every employer is required to pay.

And finally, direct expenses include the amount of accrued depreciation on fixed assets that the enterprise uses in production or in the performance of work and services.

All other types of expenses that, on the one hand, are related to the production process, that is, do not relate to non-operating expenses, but at the same time do not fall under any of the listed types of direct costs, are classified as indirect expenses.

At the same time, the company itself determines and establishes in its accounting policy the method of allocating expenses into direct and indirect. The distribution presented above is only general character. So, for example, the salary of the company’s employees as a whole can be divided into the wages of “production” and administrative personnel. It would be logical to classify the latter as indirect costs. The same situation applies to material costs and depreciation charges. After all, such expenses can also be carried out both within the framework of the production process and for the functioning of the organization as a whole, providing for its management and administration and other support structures that are not involved in the direct production of products, works or services.

The meaning of this ranking of costs is that indirect expenses for the purposes of calculating income tax are accepted at a time, upon the fact of their commission and implementation general conditions recognition of costs in tax accounting. Direct costs are taken into account only after the sale of products in the production of which these costs were involved.

Direct costs in accounting

The list of direct income tax expenses is generally identical to the types of expenses for ordinary activities in accounting. Let us remind you that they are regulated by PBU 10/99 “Expenses of the organization”. Paragraph 8 of this document contains a similar list of costs: material costs, depreciation, labor costs and social contributions. However, another point will immediately be brought up - other costs, which allows the company, again, to determine for itself which expenses it will classify in this category.

In general, this opportunity to independently distribute costs both in tax and accounting gives one additional bonus: if the company adheres to general principles classifying costs as direct in NU and ordinary in accounting, this will allow it to significantly unify accounting throughout the organization.

When producing goods, an enterprise has 2 types of costs - direct and indirect. What are they?

What are direct costs?

Under straight It is customary to understand costs that are directly related to the production of a product and are decisive in terms of its cost or have a clear economic connection with the object of production.

The main types of direct costs that characterize most types of production:

purchase of raw materials and components that are used to produce goods by the enterprise;
payment of operating costs - utilities, software licenses;
salaries of personnel employed on factory lines, compensation for contractors.

What are indirect costs?

Under indirect It is customary to understand costs that are secondary from the point of view of the cost of production of goods by an enterprise or do not have a clear economic connection with the object of production. Such costs could be:

payment for advanced training courses for factory line employees;
expenses for repairs in production workshops and offices;
expenses for advertising, promotion of the manufacturer of goods;
payment of interest on corporate loans;
expenses for office equipment, communications.

Comparison

The main difference between direct and indirect costs is the degree of influence on the cost of products. Another criterion for the difference is the presence of an economic relationship with production facilities. Moreover, the same costs may be considered direct in some cases and indirect in others, depending on the specific stage of the production process.

For example, the costs of purchasing equipment for the production of goods will be direct in relation to the factory line (that is, they will have a close economic connection with it), but indirect in relation to the cost of producing the corresponding goods on this line.

The salaries of personnel who work in production will most likely be classified as direct costs. But remuneration for specialists from other departments of the company (accounting or, for example, the advertising department) is already an indirect expense.

Why, in principle, does it become necessary to classify a company’s expenses into direct and indirect?

In practice, this is most often due to the fact that such a division of costs is established in the provisions of Article 318 of the Tax Code and is used when determining the timing of crediting costs to reduce the tax base.

Those types of expenses that the Tax Code of the Russian Federation classifies as direct expenses can be reflected in tax reporting for the current period only as goods are sold. Indirect costs can be recorded in the relevant documents in in full. But if the company provides services and does not produce goods, then both types of costs can be reflected in the same period. Thanks to this, the entrepreneur has the opportunity to use their constituent amounts to reduce the tax base at the same time.

Having determined what the difference is between direct and indirect costs, and also having considered what its practical significance is, we will record the conclusions in the table.

Table

Direct costs	Indirect costs
What do they have in common?
The same costs can be direct for some production areas and indirect for others.
What is the difference between them?
They are costs that have a clear economic connection with a particular production process	They are costs that do not have a clear economic connection with production processes
To a decisive extent influence the cost of goods produced by the company	Limited influence on the cost of goods produced by the company
Can be accepted to reduce the tax base only as the goods produced by the company are sold	Can be accepted to reduce the tax base within the reporting period without restrictions

Direct and indirect expenses in accounting and tax accounting (Vereshchagin S.A.)

Article posted date: 09/05/2017

Which costs should be included as direct costs and which as indirect? What is the best way to qualify expenses?

After the entry into force of Ch. 25 of the Tax Code of the Russian Federation, accountants are faced with the fact that many terms, concepts, definitions for tax purposes have a different meaning than in accounting. This also applies to direct and indirect costs.
In accounting, direct costs are understood as costs directly related to the production of products (performance of work, provision of services) and included in the cost of a unit of accounting for manufactured products (performed work, rendered services) on the basis of primary accounting documents (Instructions for using the Chart of Accounts).
Direct costs, for example, are:
- wage production personnel, included in the cost of a unit of production (work, services) on the basis of work orders, time sheets and other primary documents for labor accounting and payroll;
- cost of materials included in the cost according to write-off acts;
- the cost of services (work) of co-executors (subcontractors), included in the cost price on the basis of acceptance certificates for the provision of services (results of work).
The sequence of actions when reflecting direct expenses is as follows: having received the primary document, the accountant must include the cost of resources indicated in it in the cost of a unit of production (work, services).

Note. If the primary document contains only natural indicators (pieces, kilograms, meters, etc.), the accountant is additionally required to give a monetary valuation of these indicators (in professional accounting slang this is called “putting pieces in rubles”).

Indirect costs (expenses) that an organization incurs in connection with the simultaneous production of several types of products (works, services) are included in the cost of each of them by calculation using an economically feasible method chosen by the organization.
IN Methodical recommendations on the application of the Chart of Accounts for accounting the financial and economic activities of enterprises and organizations of the agro-industrial complex, approved by Order of the Ministry of Agriculture of Russia dated June 13, 2001 N 654, it is also stated: indirect production costs are a set of costs associated with production that cannot (or are not economically feasible) to be taken into account and directly attributed to specific types of products. Therefore, they are accounted for in separate accounts and distributed by type of product by calculation.
Thus, it is difficult to give an unambiguous definition of direct and indirect costs (expenses) for all organizations, regardless of the type of their activities. Some costs for one organization can be considered direct, while for another they should be considered indirect.
With regard to the costs of maintaining management personnel, as well as costs associated with sales (commercial expenses), the organization has the right to choose (clause 9 of PBU 10/99). These costs can be included in the cost of each type of product (work, service), distributed according to a selected economically justified indicator, for example, the amount of direct costs incurred. Also, the organization has the right on a monthly basis, regardless of the fact of sales of products (works, services), to write off all management and commercial expenses as a decrease in the financial result, without distributing them to the cost price.
The option chosen by the organization to write off administrative and commercial expenses must be enshrined in its accounting policies.
It is necessary to pay attention to the fact that an organization can write off not all indirect expenses monthly, but only administrative and commercial ones.
For profit tax purposes (clause 1 of Article 318 of the Tax Code of the Russian Federation), costs for the production and sale of goods (products, works, services) are also divided into direct and indirect. However, the same terms have a completely different meaning.
Direct expenses are included in the cost of goods (products, works, services) and reduce taxable profit as they are sold. Indirect expenses are written off on a monthly basis, regardless of the fact of sale, to reduce taxable profit (clause 2 of Article 318 of the Tax Code of the Russian Federation).
Thus, for profit tax purposes, the terms “direct expenses” and “indirect expenses” mean the moment they are attributed to the reduction of profit - upon sale (direct) or monthly (indirect). Whereas in accounting registers - the method of inclusion in the cost, directly or indirectly (calculated).
Which costs are direct costs and which are indirect, the organization determines independently, securing the chosen distribution procedure in the accounting policy for tax purposes (clause 1 of Article 318 of the Tax Code of the Russian Federation). When drawing up accounting policies for accounting purposes, dividing expenses into direct and indirect does not make sense. Important detail: Some types of costs may be recognized as direct at the beginning of the year, and then as indirect, or vice versa.
The choice of method for writing off part of indirect expenses (i.e. administrative and commercial) must be approached with great care.
It is generally accepted that monthly write-off of management expenses to reduce the financial result is more convenient and profitable for the organization. Firstly, the work of calculating the cost of products (works, services) is simplified. There is no need to distribute salaries of management personnel and other costs of their maintenance between types of products (works, services). Secondly, the monthly write-off of these expenses allows you to optimize financial flows when calculating income taxes.
Note that such a point of view has a right to exist when the organization has been operating for several years and has a stable market for its products (works, services). In this case, with regular revenue, monthly write-off of management expenses (without including them in the cost price) will give almost the same result as the opposite option, i.e. inclusion of administrative expenses in the cost price.
However, in the current difficult economic situation, for most, a stable sales market remains a dream. Manufactured products, especially if their production period is not two or three days, but more, it is not known when they will be sold, but all management costs are written off monthly. The losses that will inevitably arise in this case may lead, in particular, to a decrease in net assets. This can be avoided if you choose the option in which management costs are included in the cost of production, then the amount of losses will be less. The same applies to the performance of work and provision of services.
For profit tax purposes, the organization determines the list of direct expenses independently. It should be noted that some of the expenses that can be classified as indirect in the accounting registers must be recognized as direct for profit tax purposes (clause 1 of Article 318 of the Tax Code of the Russian Federation).
The list of direct expenses, as well as indirect ones, is open. At the same time, some organizations strive to qualify maximum costs as indirect expenses in order to save on income tax.
Controlling authorities constantly explain that the organization determines the list of direct and indirect expenses independently (Letters of the Ministry of Finance of Russia dated 02/10/2016 N 03-03-06/3/6878, Federal Tax Service of Russia dated 02/24/2011 N KE-4-3/2952@). However, the list of indirect costs must be justified. Moreover, this justification must be that indirect costs cannot be costs associated with the production of products (performance of work, provision of services). Costs associated with the production of products (works, services) can be recognized as indirect costs only if there is no real possibility of classifying them as direct costs using economically sound indicators.
In other words, the algorithm chosen by the organization for allocating costs to direct and indirect costs must contain economically sound indicators determined by the technological process.
In addition, so that there are no significant differences between accounting and tax accounting In our opinion, it is advisable to recognize as direct expenses for profit tax purposes those costs that are included in the cost of products (goods, works, services) in accounting registers. Even if they are indirect in the accounting registers (distributed according to some calculations), then for profit tax purposes they should be recognized as direct and included in the cost price using exactly the same algorithm.
From our point of view, in modern economic conditions, it is advisable to reduce the list of indirect expenses for profit tax purposes to a minimum, because confidence in stable receipt Most companies have no income (sales).
With “inflated” indirect costs, the organization will incur losses that can be avoided by recognizing the costs as direct expenses.
Otherwise, it turns out that the organization is initially concerned with proving to tax inspectors that the maximum costs cannot be attributed to direct costs using economically feasible indicators. Then, when preparing the income tax return, the accounting department tries to “disguise” the losses.
These problems can be avoided by recognizing most (or even all) management expenses in tax accounting as direct expenses.
Although if the organization does not care where to get cash, and their effective spending is important, it is possible to provide in the accounting policy for profit tax purposes the possibility of recognizing management costs as indirect expenses.

Literature

1. Tax code Russian Federation: part two [accepted State Duma July 19, 2000 N 117-FZ, with amendments and additions] // Reference and legal system "ConsultantPlus" [Electronic resource] / Company "ConsultantPlus".
2. On approval of the Chart of Accounts for accounting of financial and economic activities of organizations and Instructions for its application: Order of the Ministry of Finance of the Russian Federation dated October 31, 2000 N 94n // Reference and legal system "ConsultantPlus" [Electronic resource] / Company "Consultant Plus" ".
3. Raizberg B.A., Lozovsky L.Sh., Starodubtseva E.B. // Modern economic dictionary, M.: INFRA-M, 2011.

Costs are divided into direct and indirect according to the provisions of Article 318 of the Tax Code. The legislation defines a special list.

So, direct costs include:

For the purchase of materials and raw materials that are used in production.
For the purchase of components or semi-finished products.
To pay employees directly involved in production process. These expenses include payments for mandatory pension insurance, to finance the funded and insurance-based labor pension and other deductions.
For depreciation of fixed assets that are used in the production of products.

The category of indirect costs includes the amounts of all other costs, with the exception of non-operating costs. The list of expenses is contained not only in the Tax Code, but also in the Income Tax Declaration.

Why separate direct and indirect costs?

In this matter, it is necessary to note the main difference between the costs. Thus, indirect costs in the amount are fully attributed to the tax and direct costs - to the expenses of a given period as goods are sold, taking into account balances. An exception is the case when the company’s activities are aimed at providing services.

It should be noted that the list defining direct and indirect costs given in the Tax Code is mandatory. However, the company has the right, at its discretion, to add its own expenses to one or another list.

If direct and indirect costs are not specifically defined, then by default it is considered that they correspond to the list of Article 318 of the Tax Code. And when legislation introduces changes to the established list, the company will have to take them into account. In this regard, it is better to approve direct and indirect costs yourself in the company’s accounting policy.

Splitting expenses allows you to use a simplified accounting form and forecast income. In accordance with a given amount of income, when dividing costs, it is possible to calculate the optimal volume of turnover, as well as the corresponding level of costs. At the same time, the feasibility of selling certain types of products is determined.

One of the practical results of applying the classification of costs in accordance with the principle of dependence on sales volume is the ability to forecast income. In this case, the expected state of expenses is taken into account, determining the sales volume that will ensure break-even activity for each specific case.

Analysis of direct and indirect costs allows us to study the structure and composition of production costs in order to determine the main directions for finding reserves to reduce them. At the same time, it becomes possible to study the dynamics of changes in expenses of the current period in comparison with the previous one, as well as the plan as a whole and its individual articles. The analysis allows you to establish and quantify factors that influence changes in costs, determine the contribution of each individual department to the overall result achieved by the company in reducing costs. In addition, it becomes possible to identify and quantify reserves for reducing costs for the production and sale of goods.

The tasks facing accounting largely overlap with the tasks that it performs due to the fact that management accounting is considered a subsystem of accounting.

As practice shows, it is not always possible to specifically determine which costs are direct and which are indirect. This largely depends on the type of activity of the company.

An organization's expenses represent a decrease in economic benefits due to the disposal of assets. The latter may be cash or other property. Expenses of an organization are also the occurrence of obligations, which leads to a decrease in the capital of the enterprise (except for the reduction of deposits by decision of the founders).

Classification

Depending on sales (production) volumes, variable and fixed costs are distinguished. The first ones change in proportion to the number of products manufactured, services provided, and work performed. Fixed costs exist regardless of production volume. This category includes some taxes, security payments, depreciation, rental payments, management salaries, and so on. Costs may be overhead or indirect. This classification is carried out according to the connection between costs and the technological process. Depending on the level of aggregation, costs can be single-element or complex. There are also direct and indirect production costs.

Tax Code of the Russian Federation

In Art. 271-273 ch. 25 for entities paying income tax, two options are provided for determining income and costs:

Accrual method. It is considered universal and can be used in all cases.
This option is convenient in some cases, but has its limitations.

According to Art. 318, paragraph 1 of the Tax Code, payers using the accrual method are required to divide costs into indirect and direct. This is due different conditions their recognition in tax reporting. Let's take a closer look at what indirect costs are and what applies to them.

general characteristics

Refers to the tax (reporting) period as goods/work/services are sold. They are included in the cost of products under Art. 319 NK. Indirect costs are determined in a different way. What does this mean? They represent a set of costs related to technological process, which are not economically feasible or cannot be attributed directly to certain types of products. The distribution of indirect expenses is carried out in full in the same tax period in which they arose. This means that even if there was no sale, these costs reduce taxable profit for a given time period.

Indirect costs: what are they?

These costs are divided into two main categories:

General economic. They are not directly related to the technological cycle of the enterprise. Accounting for indirect expenses in this case is carried out according to the account. 26. Such costs relate to the management of the technological process.
General production. These include general workshop costs for maintenance, organization and management of the technological process. Accounting entries are made to the account. 25.

Costs of operation and maintenance of equipment

They represent indirect costs. What does this mean? This category includes costs for:

General shop costs

These indirect costs relate to process control. These include costs associated with:

Preparation and organization of production operations.
Contents of the management staff of technological departments.
Depreciation of structures, buildings, production equipment.
Ensuring normal working conditions.
Maintenance and repair of structures, equipment, buildings.
Training and career guidance of personnel.

General expenses

Costs for labor. We are talking, in particular, about recruitment, selection, training of managers, training, and retraining for advanced training.
Technological management costs.
Payment for services received from external organizations.
Production management expenses.
Maintenance of buildings, equipment, structures.
Costs for managing supply, procurement, financial and sales activities.
Mandatory taxes, fees, deductions and payments according to the procedure prescribed by law.

A specific feature of general business costs is that they are unchanged within the scale base. They can be corrected by governing decisions. The degree of their coverage can be changed by the volume of sales.

Scale base

Underneath her management analysis it is necessary to understand the specific interval of sales/production volume, within which costs have a clearly defined behavior. For example, an enterprise has a machine park of 10 units at its disposal. 1 million products are produced annually. Depreciation on fixed assets is 500 thousand rubles. Management decided to double production volume. For this purpose, an additional 10 machines were put into operation. The scale base up to this point was 0-1 million products. After increasing the machine park, it became 1-2 million.

Overhead and basic costs

This classification is carried out according to the purpose of costs. Overheads are expenses related to the management of an enterprise. The main costs are resources of all types. These are, in particular:

Objects of labor in the form of basic materials, raw materials, purchased semi-finished products.
Depreciation of fixed assets.
Salaries of workers involved in the technological (main) process.

These costs arise from the production of products. These expenses form a significant part of the costs in any enterprise. Overhead costs arise during the implementation of management functions. In their purpose, role and nature, they differ significantly from production tasks. Such costs usually relate to the organization of the enterprise's activities. They are included in accounting entries using the cost transfer method.

Cost sharing procedure

Determining which costs are indirect and which are direct depends on the specifics of the enterprise's activities. In particular, the company can:

For trading enterprises, the distribution of indirect costs and direct costs is carried out regardless of the method of determining income tax. As mentioned above, this can be an accrual method or a cash calculation option. Direct costs include:

Costs for delivering products to the consumer's warehouse, if they are not included in the price of the product.
The cost of purchasing products sold during the tax period.

Direct costs are included in the calculation as products are sold. All other expenses, with the exception of non-operating expenses, are classified as indirect. These costs reduce sales income for the current month. Direct costs are written off as sales occur. purchased products, in the cost of which they are included. Indirect expenses are taken into account when calculating income tax.

Enterprises engaged in the production of goods

For manufacturing companies the list of direct expenses is established in clause 1 of the Tax Code. This category includes costs for:

Purchase of materials and raw materials used in the production of products or performance of work, components used during installation, semi-finished products subject to additional processing.
Salaries of employees involved in the technological process, calculation of contributions for compulsory (medical and social) insurance and against occupational diseases and accidents.
Depreciation of fixed assets involved in the production of goods.

All other expenses, except non-operating expenses, are classified as indirect.

Enterprises providing services

For such companies, the division into direct and indirect costs can be carried out in the same way as for production. However, there is a significant difference in the rules for recognizing costs by one or the other. A service should be understood as an activity whose result does not have material expression. It is realized and consumed in the course of implementation. In this regard, companies providing services are not required to distribute direct costs between the expenses of the current period and the price of services that were not accepted by customers at the end of the period. This was stated in the Letter of the Ministry of Finance dated June 15, 2011. Such enterprises can recognize all expenses (both indirect and direct) in the current period. This procedure must be enshrined in the company’s financial policy.

No profit

If no income was received during the reporting period, then the company can recognize only indirect expenses. Direct costs included in the balance of unsold products cannot be used in profit calculations. If the company has not sold anything, then, accordingly, it has no direct costs. As for indirect expenses, they are not tied to the revenue received and cannot be taken into account in the current period. At the same time, if a specific cost does not generate direct income, this does not mean that it is unreasonable. It is enough that it is necessary to carry out the activity, the result of which will be the profit received. Indirect costs, therefore, can be taken into account in reducing the tax base even when the revenue has not yet been received. This refers to income in the current period.

1C: indirect costs

Methods for determining costs in tax documentation are described in the appropriate register. The user must independently indicate the list of direct costs. Everything that is not indicated in this register is interpreted by the program as indirect costs. The company approves direct costs in its financial policy. Thus, it is advisable to register the list through the appropriate tab. To do this, go to "Income Tax". Then you need to click on “Specify the list (list) of direct costs.” If the information register does not contain entries, the program will offer to make them automatically. Each item in it is presented as a condition for recognizing direct costs. The actual division of costs in tax reporting is carried out at the end of the month by a regulatory document that closes the accounting accounts (26, 25, 23, 20).

Stages of cost recognition in the program

Let's consider how the document closing the accounting accounts will be “reasoned” in order to divide expenses into indirect or direct. Simplified, the following stages can be distinguished:

For the current period (for example, March 2012) for an enterprise in the "Posting Journal" register, the document searches for all records of a certain type.
Among the found items, those whose date is no earlier than in the register template “Methods for determining indirect and direct costs in tax accounting” are selected for subsequent analysis.
If the “Division” attribute is not specified in the template, then records specified in any division are considered.
Failure to complete a “Cost Item” does not mean that any such items will be considered. Only those that have the value “Other costs” in the “Type of expense” line are taken into account.

If the entry in the financial statements satisfies the above conditions, the amount will be classified as direct costs. If an expense is discovered in accounting for which there is no suitable template in the register, then in the accounting system it will be recognized as indirect. His program will debit the corresponding subaccount. sch. 90.08.

Important point

It should be understood that before the closing date of the month, the enterprise’s costs for production are not divided. According to the settings of the chart of accounts, they are reflected as costs at the time of recording a business transaction in accounting and tax accounting. Besides this, there is one more important point. You should understand under what specific settings certain postings appear in the control unit and control unit. The state of the “direct costing method” checkbox will affect the preparation of entries exclusively in accounting when closing the month. This position does not concern NU in any way. In tax accounting, costs are either cost or written off depending on their nature. Direct costs are transferred at the end of the month to the debit of the account. 90.02.1, which records revenue from activities with the main taxation system. Indirect expenses are directly charged to the debit of the account. 90.08.1.

Conclusion

The exact list of direct costs related to sales and production is determined by the enterprise independently. This list should be included in financial policy companies. The distribution of costs is carried out taking into account the specifics of the industry and the technological process. The formation of a list of costs must have an economic justification. Indirect expenses can only be recognized as those that cannot be attributed to objective reasons to direct costs. For example, the costs of materials and raw materials are included in the cost of products. Such costs are always direct and cannot be indirect.